Abstract The broad, long-term objective of this program is to define the structure and function of protein tyrosine phosphatases (PTPs). The PTPs constitute a large family of signaling enzymes that together with protein tyrosine kinases control the status of protein tyrosine phosphorylation. Disturbance of the normal patterns of tyrosine phosphorylation leads to aberrant regulation of signal transduction, which is linked to the etiology of a variety of major human diseases, including cancer. Consequently, abnormal signaling events driven by faulty operation of tyrosine phosphorylation offer enormous opportunities for targeted intervention. This renewal application is focused on the PRL (Phosphatase of Regenerating Liver) phosphatases, which are highly oncogenic when overexpressed. However, the mechanism by which they promote tumorigenesis has not been elucidated. In the previous funding period, we discovered that mice lacking PRL2 display a number of developmental abnormalities due to decreased AKT activity as a result of increased level of the PTEN tumor suppressor. Given the strong cancer susceptibility to subtle reductions in PTEN level, the ability of PRL2 to downregulate PTEN provides the biochemical basis for its oncogenic propensity. However, there remains a significant gap in translating this knowledge to improved cancer treatment options. We hypothesize that PRL2 promotes tumorigenesis by downregulating PTEN and inhibition of PRL2 can restore PTEN level thereby obliterating loss of PTEN induced malignancies. To this end, we have obtained preliminary data showing that removal of PRL2 in PTEN heterozygous mice increases PTEN level, suppresses tumor progression, and significantly extends life. We have also identified small molecule compounds capable of disrupting a unique PRL regulatory mechanism (requirement for trimerization) with excellent anti-cancer activity. Going forward, a multifaceted and integrated approach, encompassing state-of-the-art mouse genetics and disease models, mass spectrometry, biochemistry and cell biology, X-ray crystallography, structure-based design and medicinal chemistry will be employed to 1) define the role of PRL2 in tumorigenesis using both conditional and transgenic mouse models, 2) determine the biochemical mechanism by which PRL2 downregulates PTEN using both candidate biochemical and unbiased focused peptide library and proteomic approaches, and 3) harness the unique PRL2 trimerization mechanism for novel anti-cancer agents using structure-based design, medicinal chemistry optimization, and pharmacological evaluation in PTEN deficient cancer models. Completion of the project will not only provide new insights into PRL2-mediated PTEN downregulation and tumorigenesis but also develop novel PRL2-based therapeutics for cancers induced by PTEN deficiency. Moreover, success of this project will also galvanize drug discovery effort targeting other members of the PTP family, ultimately impacting broadly on human health.